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PETRONAS DUAL TRANCHE OFFERING

USD 3.0 Billion 10-year Notes


USD 1.5 Billion 5-year Sukuk
A Case Study on Quasi Sovereign Financing in the International Bond Markets
Transaction Summary - Conventional
Offering Summary
Issuer Petronas Capital Limited
Guarantor Petroliam Nasional Berhad
Issuer Ratings A- by S&P, A1 by Moody’s
Issue Size USD3,000 million
Issue Date 12 August 2009
Petronas Capital Limited
Maturity 10 years (12 August 2019)
Spread to Treasury 1.625%
US$3,000,000,000
Guaranteed Notes Due 2019 US Treasury 10 year 3.697%
Yield 5.322%
Issue price 99.447%
Joint Bookrunners
Coupon 5.250% per annum

CIMB, Citi and Morgan


Interest Payment Dates 12th August and 12th February of each year
Stanley commencing on and including 12th February,2010
& ending and including maturity date
2009 Day Count Convention 30 / 360
Clearing System DTC / Eurocloear / Clearstream
Listings Bursa Malaysia Securities Berhad (Exempt Regime)
Labuan International Financial Exchange
Luxembourg Stock Exchange (Euro MTF)
Distribution Rule 144a / Reg S (including to Malaysian residents)
Governing Law New York Law

2
Transaction Summary - Islamic
Offering Summary
Issuer Petronas Global Sukuk Ltd
Obligor Petroliam Nasional Berhad
Issuer Ratings A- by S&P, A1 by Moody’s
Issue Size USD1,500 million
Issue Date 12 August 2009
Petronas Global Sukuk Ltd.
Maturity 5 years (12 August 2014)
Spread to Treasury 1.625%
US$1,500,000,000
Trust Certificates Due 2014 US Treasury 5yr 2.654%
Yield 4.279%
Rental Rate 4.250% per annum
Joint Bookrunners
Issue price 99.871%
Day Count Convention 30 / 360
CIMB, Citi and Morgan
Stanley Periodic Distribution Dates 12th August and 12th February of each year
commencing on and including 12th February,2010 &
2009
ending and including maturity date
Clearing System DTC / Eurocloear / Clearstream
Listings Bursa Malaysia Securities Berhad (Exempt Regime)
Labuan International Financial Exchange
Luxembourg Stock Exchange (Euro MTF)
Distribution Rule 144a / Reg S (including to Malaysian residents)
Governing Law English Law

3
Sukuk Al Ijarah Structure
Purchase
4 Purchase undertaking to buy Sukuk Assets Undertaking
from Trustee

Certificate Holders
(Investors)

Ijarah 5 1
PETRONAS Agreement
Return of Issue of
(Obligor/Lessee ) 3 Lease of Sukuk
3 principal Sukuk
Assets amount certificates
Payment 4
of Ijarah
Payment of
rentals
periodic
1
distributions
Proceeds
USD
2 Sale of beneficial ownership in PETRONAS Global Sukuk Ltd. amount
PETRONAS Sukuk Assets
(Issuer/Trustee/Lessor)
Subsidiary(s)
(Seller(s)) 2 Consideration for sale
Labuan Offshore Entity
(USD)

The Sukuk Assets comprises some of PETRONAS subsidiaries’ beneficial ownership of those pieces of industrial land situated in Malaysia, and the plant, machinery,
equipment, buildings and civil works located on those properties or any substitute assets that the Lessor and the Lessee may agree.

4
Market Condition at time of launch
• In late July, U.S stock indices rallied amidst strong 2Q earning results and positive economic data. Secondary
Asian credit flows were upbeat with credit spreads tightening aligned with the equity rally.
• Treasury yields had elevated on the back of improved risk appetite and macro economic data pointing to a
potential bottoming of the current recession. Increased supply concerns of an auctioning of $115billion into
the coming weeks of early August also drove yields higher.
• Despite summer holiday season approaching, G3 primary markets were extremely robust with high optimism
that regional economies will post improvements later in the year.
Size Tsy Spr Yield
Issuer Ratings Priced ($MM) Tenor (bps) (%) Transaction Highlights
Woori Bank A2/A- Jul 27 800 5.5Y T+450 L+391 T+450bps launch was tighter than
T+475bps whisper and T+462.5bps
official guidance
Tightened to T+420bps on the break
10x oversubscribed, final orderbook
~$8Bn
Gazprombank OJSC Baa1/BBB Jul 22 1,250 5Y 573.6 8.125 Strong response pricing well within the
stipulated guidance of 8.25% area
2.5x oversubscription/ raising an
equivalent €850 million with equivalent
yield
KasMunaiGaz Baa2/BB+ Jul 22 1,250 5.5Y N/A 12.00 2.5x oversubscription. Priced at the
indicative yield area guidance.
Ecopetrol SA Baa2/BB+ Jul 16 1,500 10Y 410 7.677 $9bn orderbook
Priced within the lower band of the price
guidance
National Federation of A2/A- 14-Jul 300 5Y 425 6.375 Book was well covered with the bulk of
Fisheries Cooperatives allocation going to Asia (80%)
Republic of the Philippines B1/BB- Jul-13 750 11Y 333 6.625 Priced through the Philly curve at the
tight end of the price guidance
Attracted 202 investors globally, with the
book closing 5.9x oversubscribed
Korea Electric Power Corp A2/A Jul 13 500 5Y 355 5.764 $3Bn orderbook
Lowest YTM and tightest pricing vs.
UST achieved by any Korean issuer
ST Engineering Aaa/AAA Jul 9 500 10Y 150 4.876 $2.5Bn orderbook - priced one day
ahead of schedule
Priced 10-20bps tighter than guidance

Korea Gas A2/A Jul 9 500 5Y 390 6.197 $6Bn orderbook


~5-10bps concession
Export-Import Bank of A2/A Jul 7 1,500 5.5Y 362.5 5.999 $7Bn orderbook
Korea ~15bps concession
Traded 5bps better on the break
Execution Highlights
Total Book Order
• The Conventional and Islamic issuances were completed USD Million

within a compressed timeline. 20,000


19,000
19,000

18,000
• The deal was announced on the afternoon of 28 July 2009, 17,000
16,000
with management roadshow destinations & timing provided 15,000
14,000
to investors. 13,000
12,000
11,000
• On the 29th July post KL roadshow event, approximate 10,000 9,138
9,000
indication of interest towards the 5yr Sukuk & 10yr 8,000
7,000
Conventional stood at $800 million and $1,000 million 6,000
5,000 4,356
4,000
respectively. 3,000 1,809
2,695 2,711
USD2.5bn
2,000
• By the 30th July soft order book grew to $1.3 billion and 1,000
-
$1.4 billion for the 5yr and 10yr tenures and inflated to $1.3 29/7/09 30/7/09 31/7/09 3/8/09 4/8/09 5/8/09

billion & $3.1 billion by 3rd August.


• The books were officially open in Asia morning on 4th Aug Investors Distribution (Conventional and Islamic
Combined)
2009 and with guidance of US Treasuries + 175bps area US
for both tenures and combined size of USD 2.5 billion for 19%

the two tranches. By the close of business in U.S, order


books across tenures showed a total of $19 billion with
Asia
over 500 accounts participating.
50%
• A final Guidance of US Treasuries +162.5bps (+/-5bps)
was released on 5 August 2009 with all order books across EU
regions closed. The offering was successfully priced at US 29%

Treasuries +162.5bps for both tenures. ME


2%

6
Bookbuilding Statistics
• The transaction was met with overwhelming reception in the global capital markets as investors were drawn to
PETRONAS’ name recognition, robust credit profile, premier industry position, and scarcity value given
PETRONAS’ absence from the primary markets since 2002. The deal was significantly oversubscribed from
the original “benchmark” size guidance.

Daily Book Order - Conventional Daily Book Order - Sukuk

USD m illion USD m illion


Asia ME Europe US Total Asia ME Europe US Total
14,000 7,000
13,000
12,000 6,000
11,000
10,000 5,000
9,000
8,000 4,000
7,000
6,000 3,000
5,000
4,000 2,000
3,000
2,000 1,000
1,000
0 0
29/07/09 30/07/09 31/07/09 03/08/09 04/08/09 05/08/09 29/07/09 30/07/09 31/07/09 03/08/09 04/08/09 05/08/09

Bookbuilding period Bookbuilding period

7
Pricing Analysis
• Bonds priced aggressively on LIBOR terms versus outstanding PETRONAS curve and other
Malaysia issuers.
• Pricing comparables illustrated that the market players were comfortable to do away with new
issue premium with the 10yr bonds being priced inside of the longer dates PETRONAS bonds

Libor -Spread
Issuer Ratings Coupon (%) Maturity Amount ($MM) Tsy Spr (bps) Yield (%)
(bps)
Malaysia
Petronas A1/A- 4.25% ‘14 1,500 162.5 113 4.279
Petronas A1/A- 5.25% ‘19 3,000 162.5 130 5.322
Petronas A1/A- 7.000 ‘12 2,000 185 103 3.04
Petronas A1/A- 7.750 ‘15 625 170 110 4.45
Petronas A1/A- 7.875 ‘22 1,000 165 134 5.48
Petronas A1/A- 7.625 ‘26 500 170 203 6.33
Penerbangan Malaysia A3/A- 5.625 ‘16 1,000 125 150 4.98
MISC A3/A- 6.125 ‘14 700 200 150 4.48
Telekom A3/A- 5.250 ‘14 500 200 150 4.48
Telekom A3/A- 7.50 ‘25 300 200 222 6.26
Shell Aa1/AA+ 4.000 ‘14 2,500 54 24 3.14
Shell Aa1/AA+ 5.200 ‘17 750 65 29 3.96
Chevron Aa1/AA 3.950 ‘14 2,000 57 28 3.17
Chevron Aa1/AA 4.950 ‘19 1,500 80 60 4.53
BP Aa1/AA 3.625 ‘14 1,400 60 24 3.20
BP Aa1/AA 4.750 ‘19 1,000 87 67 4.60
StatoilHydro Aa1/AA- 3.875 ‘14 500 77 44 3.37
StatoilHydro Aa1/AA- 5.250 ‘19 1,500 98 77 4.71
ConocoPhillips A1/A- 4.600 ‘15 1,500 95 37 3.55
ConocoPhillips A1/A- 6.000 ‘20 1,000 115 88 4.88
Allocation Statistics
The bookrunners successfully distributed to an excellent mix of quality global investors, with strong demand from
Asia
Allocation by Geography - Conventional Allocation by Geography - Islamic
Malaysia U.S.
4% Malaysia
U.S. Middle East 6% 13%
25% 7%

Rest of Asia
Middle East 39%
Europe
1%
27%

Rest of Asia
47%
Europe
31%

Allocation by Investor Type - Conventional Allocation by Investor Type - Islamic


Others Bank Others
Private Banking 6% 10% 8% Bank
12% Insurance/ Pension 24%
11% Private Banking
22%

Insurance/ Pension
6%

Asset Management Asset Management


61% 40%

9
PETRONAS Secondary Trading Performance
• Priced aggressively at the lower end of the guidance, the Petronas bonds widened in secondary
trading along with broader investment grade credit markets as traders lightened positions going
into the summer break.
• Spreads widened on light flows as market paced the digestion of the large issues, but back into
September post summer break, credit spreads tightened with increased risk appetite amidst
positive news flows on the global and the Asian economies.

Yield : Petrol 14/Petrol 19 Spreads:Petrol14/Petrol 19


PETROL 14 PETROL 19 PETROL 14 PETROL 19
PETROL 14 PETROL 19

6.00

5.50

5.00

4.50

4.00

3.50 6.00 2.40


ep

ep

ep
Sep

ct
ug

ug

ug

ct

-O
O
-S

-S

-S
-A

-A

-A

5-
7-

12
14

21

28
17

24

31

2.20
5.50
2.00
5.00
1.80
4.50
1.60

4.00 1.40

3.50 1.20
17- 24- 31- 7- 14- 21- 28- 5- 12- 17- 24- 31- 7- 14- 21- 28- 5- 12-
Aug Aug Aug Sep Sep Sep Sep Oct Oct Aug Aug Aug Sep Sep Sep Sep Oct Oct
Insight
• Petronas took an opportunistic approach. The result was tight pricing with an enlarged
financing size.

• Simultaneous conventional and Sukuk tranches ensured proper benchmark for pricing.

• Different maturities to attract the widest investor base possible to optimise pricing and size for
both the Sukuk and Conventional issues.

• First to leverage on the MIFC initiative by listing on Bursa Malaysia increased demand from
Malaysian based investors.

• Only 9% of the Sukuk tranche was allocated to dedicated Islamic funds illustrating market’s
growing acceptance of Sukuk among conventional investors.

• The Notes and the Sukuk have become new liquid benchmarks for Malaysian and other
Asian issuers.